CoStar Group Inc. Forecasts Steady U.S. Office Vacancy Through 2026

On April 29, 2026, CoStar Group Inc. released a revised forecast indicating that U.S. office vacancy rates are expected to remain stable through the year. This forecast signifies a notable shift in the commercial real estate landscape and reflects the company's ongoing analysis of market trends and demands.

According to the press release, the U.S. office vacancy rate has shown signs of retreat, decreasing to 14% in the first quarter of 2026. This figure is 20 basis points below the record peak observed in mid-2025. CoStar anticipates that this vacancy rate will hold steady through the end of 2026 before beginning a gradual decline.

Phil Mobley, the national director of office analytics at CoStar Group, elaborated on the optimistic outlook: “U.S. office vacancy is now forecasted to end 2026 roughly 10 basis points lower than previously anticipated, but should converge with earlier expectations by mid-2028.” This adjustment reflects a stronger near-term demand outlook, bolstered by a surge in leasing activity that reached its highest level since 2018 during the first quarter.

The revised forecast indicates approximately 10 million additional square feet of net absorption in 2026. This increase is largely attributed to a pull-forward of demand due to a tightening availability of desirable office spaces. The current market dynamics suggest that tenants are actively seeking quality office environments, which is driving up leasing activity.

Mobley pointed out that the supply of office space is expected to contract due to historically low construction levels coupled with elevated demolitions. This contraction in supply is anticipated to further support a gradual decrease in vacancy rates post-2026, as demand continues to stabilize.

The press release also highlighted expectations for rent growth, which is projected to remain above 1% through 2026. As vacancy rates improve, rent growth may accelerate, providing a positive outlook for landlords and property owners.

However, Mobley cautioned that risks to this outlook appear skewed to the downside. He noted that rapid productivity gains are tied to slow job growth, which could lead to stagnant hiring or potential layoffs if companies continue to leverage technology and automation effectively. Additionally, rising energy prices pose a risk to broader economic growth, which could subsequently impact office demand.

CoStar Group Inc.'s revised forecast presents a cautiously optimistic view of the U.S. office market, marked by stable vacancy rates and increased leasing activity. As the commercial real estate sector adapts to evolving demands, the outlook for rent growth remains positive, albeit with certain risks on the horizon.

CoStar Group continues to lead the charge in providing comprehensive market intelligence and analytics, reinforcing its position as a pivotal player in the real estate industry. For a deeper dive into CoStar’s products and services, interested parties are encouraged to visit their official website.